The High Court case of Vanden Recycling Ltd v Tumulty and others serves as a warning for employers who bring claims against more than one defendant to take care that settlement does not extinguish claims against any other defendants.
This case centred around the collusion of three parties in order to exploit a company’s confidential information and set up a rival business.
Vanden Recycling Ltd (the Claimant) is one of the largest brokers of plastic waste products operating in the UK. Bolton Brothers Ltd is a waste management company based in Ipswich. Kras Recycling BV is a Dutch company which conducts a range of waste management services. Vanden originally brought a claim against both Bolton and Kras, as well as former employee Ms Tumulty, as a result of the below factual scenario.
In October 2013, Ms Tumulty was hired as the company’s business development officer , tasked with the development of Vanden’s European customer base. In December 2013, VGL entered into a non-disclosure and non-competition agreement with Kras, the benefit of which was to apply to all of VGL’s subsidiaries including Vanden Recycling.
In mid-March 2015, Ms Tumulty’s role changed and she was tasked with focusing solely on the purchase of plastic waste. However, a few weeks later on 8 April 2015, Ms Tumulty gave notice of her resignation. Suspicious of her timing and conduct leading up to the resignation, Vanden instructed FTI Consulting to carry out an analysis of Ms Tumulty’s work laptop and mobile phone. FTI found that Ms Tumulty was providing confidential and commercially sensitive information to both Bolton and Kras. She was placed on garden leave, and her employment was eventually terminated. Vanden commenced its claim against all three Defendants, with the claim sum limited to £100,000. However, by 26 June 2015, Vanden had entered into Consent Orders with both Ms Tumulty and Bolton. Bolton’s Order agreed a settlement sum of £176,000 in damages and £99,000 in costs, while Ms Tumulty’s, as well as an admission of guilt, provided for payment of costs assessed at £45,000.
Kras then applied for the claim against it to be struck out or alternatively, for summary judgment to be entered in its favour on the basis that there were no reasonable prospects of success. It was submitted on their behalf that a satisfied judgment (in this case, the consent order in relation to Bolton) discharged the tort, meaning that there was no claim left to bring against Kras. The High Court ruled that Vanden was barred from continuing with its action against Kras having already obtained satisfied judgment from another of the joint wrongdoers. Summary judgment was therefore held in Kras’ favour – despite submissions on behalf of Vanden alleging Kras to have been the primary instigator of the plan to use Vanden’s confidential information.
Claimants therefore beware: drafting is key to ensuring that rights are maintained against all potential Defendants in a situation where there are a number of potential Defendants.